Letting Go of Keeping UpBehavioral research shows that comparing ourself to others can sometimes prove detrimental--especially when it comes to financial decision-making.
does not necessarily reflect the views of The Atlantic's editorial staff.
The tendency to compare oneself to other people is fundamental and often occurs whether or not we intend it. Think about it: when you meet someone new, you may not be able to say with certainty how tall the person is, but you effortlessly register whether he or she is taller than you are.* In many cases, social comparison is useful. In the absence of objective standards of success, social comparison with others helps us to evaluate and improve ourselves. But sometimes, social comparison reveals that we're inferior on some dimension (e.g., wealth, intelligence, attractiveness), which may make us feel envious.
There's nothing wrong with envy per se--it's a natural human emotion that manifests in cultures around the world; however, envy has significant negative side effects: not only on people's satisfaction with what they have 1, but also on their saving and spending behavior. For example, people will pay to reduce the earnings of others in order to avoid feeling inferior.2 They also prefer to quit bargaining and walk away empty-handed rather than accept an unfair deal.3 Even capuchin monkeys4 reject rewards if they see other monkeys receive relatively greater rewards. What's more, the negative effects of envy do not stop at self-defeating financial behaviors. Constantly worrying about what higher-ups have or do not have negatively impacts our mental health and maxes out our biological stress response, which can damage our cardiovascular and immune systems over the long-term.5
As the population grows older, it is increasingly important for people to start saving for retirement early on, but it may feel like an uphill battle. In addition to all the other environmental and psychological factors that make it difficult to save, we are bombarded by depictions of sky-high standards of consumption. Being aware of the hazards of social comparison and envy may help inoculate younger generations against the effects of these depictions. Until celebrities start flashing their retirement savings portfolios, I'm doing my best to let go of keeping up.
Could understanding our behaviors hold the key to financial security? We think so. Learn More at The Challenge Lab.
* - Though we tend to compare ourselves to similar others (e.g., we compare our salaries to a co-worker's, not Warren Buffett's), we often turn our attention to people, to whom we aspire to be similar. This tendency coupled with the assertion "Stars: they're just like us!" may lead people to compare themselves to more distant standards.
- S. T. Fiske, Envy up, scorn down: How status divides us, (New York: Russell Sage, 2011)
- Zizzo, D. J. & Oswald, A. J. (2001). Are people willing to pay to reduce others incomes? Annales d'Economie et de Statistique, 63-64, 39-62.
- Guth, W. & Tietz, R. (1986). Auctioning ultimatum bargaining positions. In R.W. Scholz (Ed.), Issues in West German decision research (pp. 60-73). Frankfurt: Lang.
- Brosnan, S. F., & De Waal, F. B. M. (2003). Monkeys reject unequal pay. Nature, 425, 297‐299.
- Marmot et al. Whitehall Studies (e.g., Kuper, H.; Marmot, M. (2003). "Job strain, job demands, decision latitude, and risk of coronary heart disease within the Whitehall II study". Journal of Epidemiology and Community Health57 (2): 147-153.)